Article written by:
Judd Ballard, CPA
Senior Manager, State & Local Tax Services
“Never before, at least in our professional careers, has sales tax been so common knowledge.”
This is not a quote of mine, rather the opening “monologue” to a breakout session I attended at a recent State and Local Tax Conference in Dallas (Steve, I hope you’re reading). But give it another read, and understand its reality. The impact of a topic which historically only piqued the interest of a few is now so popular and so widely thrown around.
In June of last year, the United States Supreme Court overturned the physical presence nexus standard for state sales tax, in favor of a new economic nexus standard in hopes of leveling the playing field between online retailers and brick-and-mortar stores. By establishing economic nexus standards that have since been followed by the vast majority of states in some manner, online retailers may now be required to collect sales tax on taxable sales made to customers in states where the retailers previously lacked a physical presence.
So unless you’re West Virginia of yesteryear (they’ve since come around), states and taxpayers alike, Wayfair will and does, apply to you. Many hoped for the potential of reduced administrative burden, yet that was evidently largely ignored. This just created a pile on your plate, and for many, a plate that has run out of room. Why now? Wasn’t Federal tax reform enough?
While the decision may not have adhered to its original intentions, there’s no doubt it is dominating the conversation among tax practitioners and their clients (in addition to the many new acronyms and catchphrases that have resulted from tax reform).
Will taxpayers be better served in the long run? Potentially. But ignore Wayfair and your plate stands to become more crowded. There are too many different residual effects by assuming this does not apply to you…ASC application, income/franchise tax considerations, the opportunity to hire more staff, etc. The most common thing you’ll hear about is the old-fashioned nexus study just became an annual risk analysis. We’re telling people the same thing!
Chances are you’re already focused on the 2018 sales apportionment schedule for income tax purposes. There are effective dates that cannot be disregarded, half of which began in 2018. To learn more about the post-Wayfair sales tax landscape, register to join members of our State and Local Tax Services team as they lead sessions at The Ohio Society of CPAs annual spring conferences being held throughout the state of Ohio. Click below for additional event details and registration: